Ingredion Incorporated

Ladies and gentlemen, thank you for standing by, and welcome to the quarter one 2020 Ingredient Incorporated earnings conference call. At this time, our participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker today, Ms. Stephanie Willis, Vice President of Investor Relations and Corporate Communications. Thank you. Please go ahead.

Good morning, and welcome to Ingredion's first quarter 2020 earnings call. I'm Tiffany Willis, Vice President of Investor Relations and Corporate Communications Officer, and I'm happy to be with you today. With me today at safe social distances are Jim Vallee, our President and CEO, and Jim Gray, our Executive Vice President and Chief Financial Officer. Our results were issued this morning in a press release. that can be found on our website, ingredient.com, in the investor section. The slides accompanying this presentation can also be found on the website and were posted a few hours ago for your convenience. As a reminder, our comments within this presentation may contain forward-looking statements. These statements are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the company's future operations and financial performance. including the impact of the COVID-19 pandemic. Actual results could differ materially from those predicted in the forward-looking statements, and Ingredion assumes no obligation to update them in the future as or if circumstances change. Additional information concerning factors that could cause actual results to differ materially from those discussed during today's conference call or in this morning's press release can be found in the company's most recently filed annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. During this call, we also refer to certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating income, and adjusted effective tax rates, which are reconciled to U.S. GAAP measures and Note 2 non-GAAP information included in our press release and in today's presentation's appendix. And with that, I am pleased to turn the call over to Jim Dally.

Thank you, Tiffany. I want to open by saying that I hope everyone of you that is joining us today, your families and your loved ones, are staying safe and healthy. For anyone who has been directly affected by illness as a result of the virus, our heartfelt thoughts are with you. This is an extraordinary moment in time for all of us. The coronavirus has affected every business in the world. Together, we are navigating a global health crisis that is bigger and more widespread than anything we have witnessed in our lifetime. I would like to take a moment to pay tribute and express our thanks to all the healthcare professionals, first responders, and other essential services workers on the front lines for all they are doing. Also, I want to expressly thank our Ingredion employees for keeping our operations running smoothly and continuing to deliver ingredients and solutions to our customers. The challenges presented by the pandemic are bringing out the best in many people, and it has been motivating to witness the leadership being displayed both inside and outside of our company. Today, our objective on this call is to provide a picture and a perspective of what we have been seeing since the pandemic hit, the current dynamics in our business, and the actions we have been taking to not only manage through, but to quickly adapt and make sure we are well positioned to emerge stronger. Beginning in January, we started to see disruptions from COVID-19 in China and and we activated our global crisis management team on January 11th. By early March, we had transitioned this into a global pandemic response team directing all activities through a project management office that immediately began coordinating, tracking, and planning business impact activities across all regions and all functions. Concurrently, we established and communicated three clear priorities that have guided us thus far. Our top priority has been to maintain our employees' health and safety. Ingredion has always been a company that has fully embraced its care first value. Our strong safety culture, which has allowed us to operate for many years at world-class levels when it comes to minimizing injuries in the workplace, has enabled us, in this case, to readily adopt protocols and take measures to protect employees' health. We rapidly followed guidelines of public health authorities for physical distancing, increased personal hygiene and sanitization, and provided the necessary personal protective equipment to employees. I am proud of the coordinated efforts of everyone in our organization to adjust and adapt to safe new ways of working to enable us to maintain a secure supply of ingredients to our customers. Our second priority has been to be a responsible corporate citizen, not only following local governmental guidelines to protect local health systems, but proudly supporting and giving back to the communities in which we operate. Ingredion teams around the world are supporting charitable organizations, and we are actively supporting the Global Food Banking Network, with two corporate donations, which thus far will provide 1.2 million meals to people in need. Our third priority has been to maintain business continuity to serve our customers without interruption. We are focused on ensuring the safety and quality of our food and beverage ingredients, as well as the availability of products into the supply chains of our customers. And I'm pleased to say that thus far, we've been able to do an excellent job in that regard, and we have received notes and comments of appreciation from a range of customers, big and small, acknowledging the support for our efforts on their behalf. We continue to monitor this rapidly evolving situation and are working closely with our customers, building on our strengths, sharing respective best practices, and focusing on recovery planning. Now, let me transition to our first quarter. We are pleased with our results for the quarter. Amid macroeconomic disruptions, we delivered solid operational and financial results. This was driven by healthy demand for our products, continued growth of our specialty portfolio, and further progress to streamline our organization. For the quarter, our global net sales were flat compared to prior year. Absent $40 million of negative foreign exchange impacts, net sales were up 3% versus the prior year. Net sales absent foreign exchange were up in three of four regions. Adjusted operating income for the quarter was up 1% year over year and up 4% absent foreign exchange translation impacts. Adjusted operating income was either up or flat in all four regions. Now let's discuss the highlights of each region's performance during the first quarter. In North America, sales were up slightly for the quarter versus prior year, with favorable price mix offsetting volume decline. Operating income was $125 million flat year over year. Improved price mix and favorable freight costs were partially offset by higher net corn costs due to the timing of corn hedge mark-to-market impacts. The South America region experienced 4% sales growth versus prior year despite significant foreign exchange headwinds. As in foreign exchange, sales were up 15% driven by strong pricing actions and volume growth. Operating income was $26 million, up 44% versus prior year due to favorable pricing and higher volumes. Our South America team has consistently been able to demonstrate an ability to drive necessary pricing actions successfully, despite a variety of market challenges. Moving to Asia Pacific, sales were down 7% compared to prior year due to volume decline, foreign currency, and unfavorable price mix. With the early onset of COVID-19 in China and Korea, volumes in those countries were impacted by stay-at-home orders throughout the quarter. Operating income at $20 million was flat versus prior year, impacted by weaker volumes, offset by favorable tapioca margins. Moving to India, our sales were flat for the quarter. Excluding foreign exchange, our sales were up 6%, driven by favorable price mix and volume growth. Operating income at $27 million was up 13%, driven by favorable price mix, volume growth, and lower cost of goods sold as a result of cost-smart savings actions. Now, let me turn it over to Jim Gray, who will review the financial results in more detail. Jim?